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Manufacturing report shows growth in production [Updated]

January 3, 2011 | 12:01
pm

Activity in U.S. manufacturing grew for the 17th straight month in December, according to a report out Monday. New orders, production and prices all grew in December, according to the Institute for Supply Management manufacturing report.

"We saw significant recovery for much of the U.S. manufacturing sector in 2010," said Norbert J. Ore, chairman of the ISM survey committee.

But in what has become a familiar refrain, the report showed few jobs created to accompany this growth. The ISM report’s employment index was down slightly from November but suggested continued job growth in the sector. Bureau of Labor Statistics numbers also show sluggish manufacturing employment. Employment in manufacturing fell both in November from October and in October from September. There are currently 11.6 million people employed in the sector.

That's because in manufacturing, many jobs that were lost in the recession aren't coming back, said Mitch Free, chief executive and founder of MFG.com Inc., a global manufacturing marketplace.

"The manufacturing sector is quite healthy right now, but it's smaller than it's been in 150 years," Free said. Many companies used the recession as an opportunity to "trim the fat," he said.

That means a new reality for manufacturing in the U.S.: Instead of assembly-line jobs where people do repetitive tasks all day, there is highly skilled manufacturing assisted by computers and machines, he said.

"You need more than a skill set, you need to know how to program and operate computers," he said.

But there is still a future for people who can fulfill those upper level jobs. Certain products -- medical devices, aerospace equipment, airport screeners -- must, by law, be made in the U.S. That means that regardless of how much automation replaces people, there will still be a heavy manufacturing presence in the country.

The ISM report shows that 11 out of 18 industries experienced growth in December, including fabricated metal products, machinery and computer and electronic products. Paper and printing industries shrank.

The PMI, an index of manufacturing growth, registered 57% in December, up 0.4 of a percentage point from November. A PMI reading above 50% indicates that the sector is expanding.

[Updated at 2:34 p.m.: An earlier version of this post said that according to the ISM report, manufacturing employment was down from November. The report’s employment index fell slightly but suggested continued job growth in the sector.]